Page:United States Statutes at Large Volume 100 Part 3.djvu/495

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PUBLIC LAW 99-000—MMMM. DD, 1986

PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2303

(2) INTEREST.—Subsection (f) of section 856 (relating to qualifying interest income) is amended to read as follows: "(f) INTEREST.—

"(1) IN GENERAL.—For purposes of paragraphs (2)(B) and (3)(B) of subsection (c), the term 'interest' does not include any amount received or accrued (directly or indirectly) if the determination of such amount depends (in whole or in part) on the income or profits of any person, except that— "(A) any amount so received or accrued shall not be excluded from the term 'interest' solely by reason of being based on a fixed percentage or percentages of receipts or sales, and "(B) any amount so received or accrued with respect to an obligation secured by a mortgage on real property or an interest in real property shall not be excluded from the term 'interest' solely by reason of being based on the income or profits of the debtor from such property, if— "(i) the debtor derives substantially all of its gross income with respect to such property from the leasing of substantially all of its interests in such property to tenants, and "(ii) the amounts received or accrued directly or indirectly by the debtor from such tenants are only qualified rents (as defined in subsection (d)(6)(B)). "(2) SPECIAL RULE.—Where a real estate investment trust receives or accrues any amount which would be excluded from the term 'interest' solely because the debtor of the real estate investment trust receives or accrues any amount the determination of which depends (in whole or in part) on the income or profits of any person, only a proportionate part (determined under regulations prescribed by the Secretary) of the amount received or accrued by the real estate investment trust shall be excluded from the term 'interest'." (3) (DONFORMING AMENDMENT.—Subparagraph (A) of section

856(d)(2) is amended by striking out "paragraph (4)" and inserting in lieu thereof "paragraphs (4) and (6)". SEC. 664. DISTRIBUTION REQUIREMENTS. (a) EXCLUSION OF CERTAIN NONCASH INCOME FROM DISTRIBUTION

REQUIREMENT.—Subparagraph (B) of section 857(a)(l) (relating to distribution requirements) is amended to read as follows: "(B) any excess noncash income (as determined under subsection (e)); and" (b) EXCESS NONCASH INCOME DEFINED.—Section 857 is amended by

redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: "(e) EXCESS NONCASH INCOME.—

"(1) IN GENERAL.—For purposes of subsection (a)(l)(B), the term 'excess noncash income means the excess (if any) of— "(A) the amount determined under paragraph (2) for the taxable year, over "(B) 5 percent of the real estate investment trust taxable income for the taxable year determined without regard to the deduction for dividends paid (as defined in section 561) and by excluding any net capital gain. "(2) DETERMINATION OF AMOUNT.—The amount determined under this paragraph for the taxable year is the sum of—